April 12 (Reuters) - California Governor Gavin Newsom on Friday proposed a new fund to pay for wildfire liabilities, while holding the state's largest utility more accountable for the growing number of blazes in the state. The creation of a fund that would allow utilities to pay for wildfire damage claims sent PG&E Corp shares up nearly 12 percent.

"PG&E is a textbook example of what happens when a utility does not invest in safety after numerous deadly reminders to do so over many years," a report released by Newsom said.

PG&E had no immediate response to the report.

Newsom's report calls for changing liability for wildfire damage to a fault-based system. The current system, known as inverse condemnation, exposes the state's utilities to liabilities from wildfires regardless of their negligence, as long as their equipment is involved.

The current system pushed PG&E to seek bankruptcy protection in January, as it faced liabilities in excess of $30 billion related to the deadliest wildfires in California's history.

The report proposed creating two funds to help utilities pay for wildfire damage claims and spread the cost more widely among stakeholders.

Shares of Edison International also rose 7 percent at $66.8.

Edison International is the parent company of the utility Southern California Edison Co. Earlier in March, investigators found that the devastating Thomas Fire in northwest of Los Angeles was sparked by power lines owned by SoCal.

The report was harshly critical of PG&E, saying it is "taking advantage of the bankruptcy process to promote the interests of investors over fire victims and other stakeholders."

The state will monitor and intervene in the banKruptcy proceedings to protect California's interests, it said.

Damage estimates for the 2018 wildfire season are staggering, with insured losses alone exceeding $12 billion, the report said.

"The current system for allocating costs associated with catastrophic wildfires - often caused by utility infrastructure, but exacerbated by drought, climate change, land-use policies and a lack of forest management - is untenable both for utility customers and for our economy," the report said.

The report calls on the federal government to better manage its forests, as the owner of 57 percent of California's forestland.

U.S. President Donald Trump in January threatened to cut off federal relief to California for wildfires for what he called mismanagement of the state's forests.

The Federal Emergency Management Agency has been providing assistance to survivors after wildfires in November collectively damaged or destroyed more than 20,000 structures and killed at least 89 people.

The largest blaze was the Camp Fire that destroyed most of Paradise in Northern California town of Paradise, killing at least 86 people, the deadliest wildfire in the United States in at least a century.

The state's fire season is now almost year round. More than 25 million acres of California's wildlands are classified as under very high or extreme fire threat. About a quarter of the state's population, 11 million people, lives in that high risk area, the report said. (Reporting by Aishwarya Venugopal and Shanti Nair in Bengaluru; writing by Bill Tarrant; editing by Shounak Dasgupta and Grant McCool)